Chief executive Michael Surbaugh said the group will now allow individuals to enroll based on the gender with which they identify, ending a more than century-old policy of using the gender on their birth certificate.
"We realized that referring to birth certificates as the reference point is no longer sufficient," he said in a statement.
"Communities and state laws are now interpreting gender identity differently. And these new laws vary widely from state to state."
"We are incredibly proud of Joe Maldonado -- the transgender boy from New Jersey whose expulsion last year ignited this controversy -- and his mother Kristie for their courage in doing what they knew was right," Wahls said in a statement.
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"We are also proud of the Boy Scouts for deciding to do the right thing."
The move marked a major shift for the Boy Scouts, which ended a ban on gay scouts in 2013.
Two years later, it officially scrapped a decades-old ban on gay troop leaders, a historic but controversial decision after years of legal wrangling and internal strife.